Southwest Airlines Co.
) is slated to report its second-quarter 2014 results on July 24,
before the market opens. Last quarter, the company had delivered a
12.50% positive earnings surprise. Let's see how things are shaping
up prior to this announcement.
Factors Influencing Results this Quarter
After operating for several decades within the U.S. domestic
market, Southwest Airlines has finally spread its wings into the
international territory with flights to the Caribbean. The carrier
also plans to expand its international service to Mexico and
Dominican Republic, going forward. Additionally, the company
reported traffic growth for each month in the course of the second
quarter, thus reiterating our bullish stance.
The carrier also remains optimistic about its second quarter
PRASM (passenger revenue per available seat miles) and expects it
to grow by 8%. The slot wins at the LaGuardia (LGA) airport in New
York and at Reagan National Airport (DCA) in Washington, D.C. has
widened Southwest Airlines' scope for expansion. However, an upward
trend in jet fuel price can affect the company's performance moving
Our proven model does not conclusively show that Southwest
Airlines is likely to beat earnings. This is because a stock needs
to have both a positive
and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to
happen. Unfortunately, that is not the case here as elaborated
Earnings ESP, which represents the difference between the Most
Accurate estimate and the Zacks Consensus Estimate, stands at 0.00%
for Southwest Airlines.
Southwest Airlines carries a Zacks Rank #1 which increases the
predictive power of ESP. But when combined with ESP of 0.00%, it
makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revision momentum.
Other Stocks to Consider
Here are some other companies to consider as our model shows
that these have the right combination of elements to post an
earnings beat this quarter:
Allegiant Travel Group Inc.
), with earnings ESP of +6.40% and a Zacks Rank #1.
American Airlines Group Inc.
) with earnings ESP of +1.56% and a Zacks Rank #1.
Alaska Air Group Inc.
), with earnings ESP of +0.92% and a Zacks Rank #1.
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SOUTHWEST AIR (LUV): Free Stock Analysis Report
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